Can Bitcoin Bring More Investment Opportunities to South Africa?

The South African financial world is in a state of change thanks to fintech and the ever-expanding presence of cryptocurrencies such as Bitcoin. Following news that the South African Reserve Bank has chosen Bitcoin outfit Bankymoon to help it explore cryptocurrency technology, investors are starting to consider the value of fintech as an investment opportunity. […]

The South African financial world is in a state of change thanks to fintech and the ever-expanding presence of cryptocurrencies such as Bitcoin. Following news that the South African Reserve Bank has chosen Bitcoin outfit Bankymoon to help it explore cryptocurrency technology, investors are starting to consider the value of fintech as an investment opportunity.

Traditionally, the value of the South Africa 40 has been buoyed by mining companies in the region. With the likes of Gold Fields and Anglo American maintaining the overall value of the South Africa 40 in spite of the country’s current economic troubles, mining remains a solid invest option. In fact, industry observer Richard Baker has pointed out that South Africa’s 40 wealthiest companies could be set to benefit from an economic boom across Africa.

South Africa’s Biggest Companies Continue to Thrive

“Bonne Terre Mine and Town” (CC BY 2.0) by robertstinnett

Analysing recent reports that nine of the twenty fastest growing economies in the world are now located in Africa, Baker asserts that new opportunities may soon arise for South Africa. Essentially, as economies in the region strengthen, industrialisation will increase and that will require natural resources. With this being the case, mining companies listed on the South Africa 40 index will be perfectly placed to serve those needs. Indeed, as well as having the experience and infrastructure, companies like Gold Fields will understand the market more than, for example, China Shenhua Energy.

However, as significant as the mining industry still is in South Africa, it’s hard not to see it as a finite resource. With new forms of energy and construction techniques being developed all the time, there is a shelf life on natural resources. If this proves to be the case, fintech will almost certainly be the industry to invest in. According to Statista, bank spending on fintech in North America alone topped $17 billion in 2015 and will hit $19.9 billion by the close of 2017.

South Africa Getting Ahead of the Pack by Embracing New Technology Early

“gogocoin launch” (CC BY 2.0) by pinguino

This trend hasn’t been lost on South Africa’s largest financial institutions. On top of the South African Reserve Bank partnering with a Bitcoin company to explore new opportunities, Finance Minister Malusi Gigaba has said his department is now looking at Bitcoin. While any form of regulation designed to help advance the industry will take time, it’s encouraging to see that the government isn’t dismissing Bitcoin, cryptocurrencies or fintech out of hand.

Will the rise of fintech in South Africa bring a ton of investment into the country over the next two years? Possibly not. However, as industries such as mining start to decline and South Africa beings to look for new ways to attract investment, online technology appears to be the frontrunner. By embracing Bitcoin and everything that surrounds it now, South Africa is already positioning itself as a leader in Africa and that should serve it well as we move into a world of virtual currencies.